Japanese electronics company Panasonic’s Group CEO Yuki Kusumi has said that the company needs to focus on boosting productivity ahead of opening new battery plant in the US. The chief executive signaled that the Tesla supplier may hold off building its third battery plant in North America as demand for electric vehicles in the country has been cooling down.
The battery unit, Panasonic Energy, had previously said, that it aimed to decide on building the factory by the end of March. However, Kusumi, who is also the CEO of Panasonic Holdings told Reuters that a decision would be made only “when the timing is right”. “I keep telling people we need to think about thoroughly raising productivity before setting up a third location,” he said.
Productivity boost versus new battery plant
Panasonic Energy has a battery plant in Nevada and has broken ground on a second one in Kansas. The company expects the Kansas plant to take its annual auto battery capacity to 80 gigawatt hours (GWh) a year while the ambition is to raise that to 200 GWh by early 2031. Kusumi said there was room to raise production capacity by improving processes such as machine maintenance and that time lags due to changing circumstances happen in any business.
With this in mind, he has instructed the energy unit to prioritise boosting production volume from its existing investment over deciding on the site of the third plant. He also emphasized that it was better to have fewer production sites given the human resources requirements of a new plant.
Cooling demand for EVs
The signs of cooling demand for EVs in key markets such as the US and Europe have prompted some automakers such as General Motors and Ford to scale back their EV production plans. While consumer demand for EVs is growing worldwide, it has cooled in these markets, and is not as profitable as industry executives had earlier anticipated. One of the reasons is higher interest rates which have pushed these EVs out of reach for middle-income consumers who are also waiting for cheaper models now under development.
Panasonic wants the energy unit to improve its manufacturing to generate profits without relying on the US Inflation Reduction Act, which has invested in new EV battery plants with an aim to boost domestic production.